DJIA, inflation adjusted

The article speaks for itself: The Real Dow


Inflation adjusted return for Dow Jones Industrial Average is 1.64 percent compounded annually.

The following paragraphs are enough to induce humility in an irrationally exuberant investor:

"To illustrate: the Dow averaged 985.93 in 1/66, and 4746.76 in 9/95 = 4.81 times higher; the CPI-U was 31.8 in 1/66, and 153.2 in 9/95 = 4.82 times higher; thus, the Real Dow for 1/66 and 9/95 are very nearly equal at 46.4 (see plot). This plot is directly inspired by the 3/30/99 publication of such a plot, titled “Dow, Inflation Adjusted”, by The Wall Street Journal (in article “The First 10,000 Points. How It All Adds Up to 10000”, page C14); the agreeing overlay of the two plots is here with quoted text."

"Again to illustrate: the Dow averaged 985.93 in 1/66, and it was nearly the same 16.75 yr later, = 988.71 in 10/82; but the CPI-U increased from 31.8 in 1/66, to 98.2 in 10/82 = 3.09 times higher; thus, the Real Dow for 1/66 and 10/82 are very different, = 46.4 and 15.1 (see plot), a more than 2/3 decrease over the 16.75 yr."

Financial Foolishness

Came across the following article in a mainstream financial newspaper in India:

Mutual Funds Best Bet to Beat Inflation

The sheer stupidity of the article is staggering.

See, for example:

"he said even a regular investment of a small sum of Rs 200 a month through the Systematic Investment Plan (SIP) route for 6 or 7 years would fetch an investor Rs 12 lakh after 20 years subject to an annualised return of 10 per cent"

Now supposing the investor does better and invests 200x12x7 = 16800 right at the beginning. Compounding a non-inflation-adjusted return of 10% (as claimed) leads to a multiple of 1.1^20 = 6.72. 6.72 times the original principal = 112896.

Counting in inflation at 5% per annum, the multiple reduces to: 1.05^20 = 2.65, giving an inflation adjusted return at the end of 20 years = 44575.

It doesn't look as spectacular, correct?

Let's look further:

"In today’s scenario, the stock market would provide a return of 20-25 per cent annually."

Not so, that has been the historical long term performance of Sensex over 20 years (where individual years at times gave negative returns), inducing future performance from the past is completely irrational.

"When the returns are 20 per cent, the maturity value at the end of 20 years would be doubled to Rs 24 lakh. Investment of Rs 500 every month could get a return of Rs 30- Rs 35 lakh after 20 years whereas the actual investment is only for 6 or 7 years. No other savings could match the return provided by MFs."

Alright, let's calculate. Suppose the investor invests 500x12x7 = 42000 right at the beginning, and earns a non-inflation-adjusted return of 20%. Over a 20 year period, the compounding multiple of principal = 38.33. Asset value = 16 lakhs. (when it is claimed to be 30-35 lakhs).

Counting inflation of 5%, the returns are only 16 times = 672000.

Assuming, of course the following:

1. The market is not in a temporary crash after 20 years (which might take 5 more years to get out of).

2. The market behaves in the long term and the investment does not get blown up.

3. One discounts MF loads, brokerage charges and MF management charges.

Finally, the piece-de-resistance:

"Offering a personal example, he said `believe me or not, I am investing and making money only after reading the business column in the Business Line.'"

Voila!

INLAND EMPIRE by David Lynch

The latest film by David Lynch is the third in his (for lack of a name) Identity-under-attack trilogy. Both the earlier films, Lost Highway and Mulholland Drive, bring a crisis of identity to an exquisitely realized vision. The crisis of identity happens at two levels in both films. Firstly the identity is humiliated by the infidelity of one's partner, and secondly it suffers confusion and a nightmarish escape from the painful reality of the consequences of one's response to that infidelity.

INLAND EMPIRE is superficially about the same theme, infidelity and the identity under attack. But in this film, Lynch considers infidelity to be not just a cause of an identity crisis, but also an effect of it.

On the surface, the film is about an aging actress, Nikki Grace, who acts in a film about infidelity and murder. In her desire to embody her character totally, she gets possessed by it to the extent that she is unable to make a meaningful distinction between her dreams, hallucinations, the film role and her actual reality.


Lynch, in one of the most rebellious acts by a mainstream director, shot and edited the film himself on a consumer grade camcorder and distributed it himself. The film has mainly played in film festivals and has only recently been released on DVD.

Cinematic art is especially prone to leading its participants towards an identity crisis. First, a real life event (an actual occurrence of infidelity, "the longest running show in history") inspires the artist to create a fictional account of it (the Polish gypsy tale). This is the first creation of another world. Secondly, in a cinematic adaptation of a fictional text, the actors are asked to play the characters and not be themselves. This is the second creation, doubly removed from reality. Thirdly, the spectators watch the enactment of this second reality on a screen, which is not real but is a projection of light, and identify with the characters on screen. Spectators feel happy, sad, fearful, angry, by identifying with the storyline and its characters.

One of the most interesting ideas explored in this film is what happens to an artist when she sees herself playing a character on the screen. She was already there, playing it for real. Now she is watching herself on the screen and as a spectator, trying to identify with what the director is trying to convey by the mood of the film, the lighting and the thousand other things which she didn't notice when she was engrossed in playing her part.

There has been a lot of discussion about the admittedly hard-to-understand narrative (or the lack of narrative) in the film. However, it is easier to enjoy and appreciate this film if one sees it as a maze in which one's identity is lost and not everything makes complete sense.

The first time there is a hint of the identity being cursed is when the actress starts embodying the role and she gets emotionally affected. Someone sees another presence in the set, and that perception is literally true, though the seeing was not of a physical being but of a new persona arriving.

Also explored are themes of feminine entanglement versus masculine distancing in a relationship. This distant-ness, or the lack of emotional depth can be considered a childish trait of an ego not fully developed. Males are repeatedly depicted as mental and emotional infants in this film.

The director is scathingly critical about the values of show business and about the commodification of a woman's body, about how the size of one's breasts determines success for a woman in almost any field (be it a nightclub, cinema, in one's career, on the street or in finding a life partner). And about how show-business is peculiarly cruel to women actresses. The sequence where Sue is bleeding on the boulevard of the stars is the one of most harrowing depictions in history of glamor versus suffering.

Some of the scene compositions are breathtaking in their originality and though it is a long film, it never feels long. As is usual with Lynch, the sound design and music in the film is superlative. The end titles are an exuberant treat in themselves.

Recommendation: Must-see.

INLAND EMPIRE by David Lynch (pre-screening)

The Chandigarh Art Films Club is screening the latest work by David Lynch on this Sunday.


This is a film which will never run in a theater in India and most people will never hear of it, but this is a film that I have wanted to see for more than an year.

From the review by Walter Chaw:

Writing about it is perhaps, to paraphrase Frank Zappa, like dancing about architecture, but Inland Empire is a fascinating, terrifying document of the machinations of the lizard brain and even the instinct to represent it in story and image--of how all the intricate steps in the waltz of love and jealousy (and art and expression) might just be the product of millennia of biological hardwiring.

The Horror of the Progeny

Three films: Benny's Video by Michael Haneke, Rosemary's Baby by Roman Polanski and EraserHead by David Lynch are diverse approaches to the deep-rooted fear and horror at the anxiety of bringing forth an inhuman child into the world.

Benny's Video, the second film in the emotional glaciation trilogy by Michael Haneke, is about the total breakdown of the sense of the other in the "supermodern" world.

Our primary interface to the world has become technological. As more and more of what we see what is fed to us by media, a strange kind of narcissism, self-absorption and apathy colors our self. No longer knowing the difference (or perhaps the economic forces actually seek to erase this difference) between an artificial image and reality, between an advertisement and a news bulletin, between what is shown and what is happening, makes us what can be called as virtual human beings, who behave and look like humans but have become so programmable and subjectively dead (lacking any authentic perception) that we might as well be androids.


Benny, a teenager, sees the world through his video equipment. The primary experience of life for the modern man is by proxy. Through TV, cinema, newspapers, the invisible creators of the virtual world shape our self. And how can a child succeed against the polished skills of the masters of mass communication? How will the parents protect a child from the media? The media is the world for the modern man.

The day starts with the newspaper, happens at the computer, and ends with television or a film. The direct experience of life is a luxury, unachieveable even as a tourist in a village. We have come so far (and moving farther every day) from a life of genuine human contact that our clumsy efforts to regain that humanity for ourselves are invariably futile or, worse, disastrous. It is in this context that one can understand the bitter urge of Non Resident Indians to involve themselves in some way for the betterment of their motherland.

The generation gap depicted in Benny's Video is not of different values or priorities in life, it is the horror of having a child with whom there is no sense of communication or understanding. The assumption that most urban children make, that their parents can't understand them, is a self-fulfilling prophecy. Alienation is a vicious cycle in which every dose of apathy in the outer world makes one more and more apathetic oneself.

There are two scenes of painful crying in the film, and if the first (the unknown girl) is horrific in its brutality, the second (the mother) is tragic in its hysterical perception of the inhumanity of what came out of oneself.

In Rosemary's Baby, Roman Polanski has brought to film the worst nightmare of an expectant mother. All the fears and phobias, that one might actually give birth to a monster, that one might be trapped into caring (because it is one's creation) for a being that is alien and vile, that one will see a propagation of one's self in the worst possible way, are brought to a genre-defying climax.


What is remarkable about the ending is not the discovery, but the effect of that discovery on the mother. The horror is not what is brought forth, the horror is the loving acceptance of it.

The film is good, but not a masterpiece. It has little to say to one on a repeat viewing.

In David Lynch's first film, Eraserhead, he points his camera gaze at the post-industrial fear of commitment. This highly stylized film, with a collection of memorable and disturbing mise-en-scene's brings into sharp b&w focus the struggle of the modern intellectual man to evade the trappings of caring for an unwanted child.

Is it heretical to question the affection and love that parents feel for their child, no matter how ugly or deformed he is? The film is symbolic in various ways. The lady in the radiator, the benevolent Goddess is symbolic of freedom and happiness. The head and the hair are symbolic of intellection, which might as well be thrown out when one tries to fit in one monstrous responsibility after another in one's life.


Also dealt with are notions of carnal guilt leading to commitment, the evaporation of personal space, the fear of being used up for something extremely trivial, and of shared responsibilities in a nuclear family.

All three films are remarkable and a film enthusiast should not miss an opportunity to see them.